Bullish Day Two

Canadian Algonquin Power & Utilities Corp. (NYSE: AQN) announced Q3 financial results in US dollars:

Q3 2019 Financial Highlights

  • Revenues of $365.6 mn, consistent with the previous year but below consensus;
  • Adjusted EBITDA (cashflow) of $186.9 mn, a y/y increase of 13%;
  • Adjusted net earnings of $69.2 mn, a y/y increase of 39%;
  • Adjusted net earnings per share of $0.14, a rise from last Q3 of 40%;
  • Adjusted Funds from Operations of $120.1 mn, a year-over-year decrease of 6%.

Please note that Algonquin is not covered by either Investor's Digest of Canada or Value Line, and I do the work on it myself. So why did I wait for the conference cal before writing this article? It is a green utility with hydro and wind power production and also diversified into water supply. 

It is not just Donald Trump who reminds me of a Mafia boss. The Empire State where my business is incorporated is also prone to threats typical of cement-shoe gangsters. Yesterday I received a formal note from Albany threatening my company with penalties and interest and garnisheeing of corporate funds because of a hitherto-unknown tax liability they claim over my corporate accounts for 2018. The tax assessed amounted to $0.00 but the State of NY sought interest of $2.05 on this 'debt' and then assessed a penalty of $51.25, bringing the total to $53.30. My accountant, whom I called, will deal with this threat gratis, having prepared corporate taxes for my company, d/b/a Global Investing, since its founding.

Clearly I am not the only one being harassed - if you phone the tax office, the wait time is 18 to 24 minutes. The website only lets you pay the vigorish, not object to it. Nobody picked up after 24 minutes. I then found the direct line for businesses, which was not on the claim form, and got through to a clerk who said the whole bill will be waived because it was an error, but the form will take 3 months to be sent to me. At least I avoided the accountant.

The poor victims of our Mafioso president do not get any refunds. We have a corporate report from Deutschland and other big news from Israel plus items from Japan, Australia, Hong Kong, Canada, Mexico, Spain, Italy, Ireland, Belgium, Finland, Denmark, Switzerland, South Africa, Brazil, and the USA.

Finance

*Allianz SE today reported Q3 net profit up 0.6% from prior year at euros 1.95 bn and revenues rose 8.1% to euros 33.4 bn. However operating profit fell by 0.1% in this year from last, to euros 2.98 bn. AZSEY forecast that full year operating profit will be at the high end of its earlier target of euros 11-12 bn. The German insurer is spending euros 800 mn to take a 4% stake in Taikang Life Insurance, a biggie in China. Germany also produced good export numbers.

This should boost the value of our own AIG Group Ltd whose primary listing in in Hong Kong but AIG fell 5.1% today. AZSEY fell 2.5%.

*Banco Santander fell 2.5% in Madrid overnight. SAN is down 1.8% here. It did a second deal over credit services, this time with Telecom Italia for consumer installment loans, to be extended to cover insurance of other finance systems later. The Spanish bank will own 51% of the jv which will help TIAOF cut its credit risk. Also rising on the news is Spain's Telefonica SA, TEF, which is up to over $7 today.

*Scotiabank issued a 3-yr note in Mexico for MPN 6 bn (about $313 mn) which will pay off in UDI's, a measure of the Mexican consumer price index, at either 25 bn peso or $1.302 mn). BNS specializes in complex derivatives elsewhere as well as South of the Border. Source: Sentidocomun.co.mex

*Our newest spinoff holding, Nordea Bank AB, chopped off by Sampo Oij, will present on Nov. 18 at the Deutsche Bank ADR conference at 8:30 am. It is Danish but SAXPY is finnish
 

Drug Dealers

*A day after Teva (TEVA) reported on Q3, it filed to sell new bonds, which may eventually lead to the redemption at par and with made whole provisions of the convertible and straight bonds we own:

TEVA announced a private placement of senior notes: Teva Pharmaceutical Finance Netherlands II B.V. of Euro-denominated Senior Notes and Teva Pharmaceutical Finance Netherlands III B.V. together with Teva Finance II issuers, of US$-denominated Senior Notes.

The offering of the Notes under rule 144A will be a private offering exempt from the registration requirements of the 1933 Securities Act, as amended, subject to market and other conditions. Teva expects to use the net proceeds from the offerings, together with cash on hand, to (i) fund the announced tender offer to purchase, for cash, its 2.200% Senior Notes due 2021, and its 3.650% Senior Notes due 2021 for a maximum combined aggregate purchase price (exclusive of accrued and unpaid interest but inclusive of tender premium) of up to $1.5 bn. The new Notes will be unsecured senior obligations of the issuers and will be unconditionally guaranteed on a senior basis by Teva. US persons may not subscribe the new bonds, only institutions. This is American CFO Mike McClellan's swansong, as he will retire at year-end for personal reasons.

Meanwhile Teva stock gained 2.6% overnight and hit $8.69 in European trading and is now at $9.04 here, up another 6.6%. I sold some of my old shares to TEVA to take an 80% tax loss (personal, not corporate.)The conference call included discussion of the new issue. TEVA has a target of reducing its debt to under $3 bn in 3 to 5 years and to reduce leverage and but also has to provision for opioid judgments which may go against it. Its debt at the close of Sept. was $26.9 bn, down $2 bn YTD but still a large hunk of change.

*Swiss Roche won Canadian ok for administering its Imbruica with Gazyva as a first treatment of active chronic lymphocytic leukemia, without chemotherapy. RHHBY is one of the top 5 stocks held by iShares MSCI EAFE ETF (IEFA) along with Basel rival Novartis.

*Australian Benitec Biopharma (BNTC) warrants today are up 73.08%.

Tech & Tel

*Make My Trip fell 6.5% yesterday because two US firms in on-line travel booking lost traction. MMYT operates in India, a different market with different marketing systems.

*MultipleChoice, MCHOY, which sells TV programs and ads in Africa, gained 6.8% overnight.

*Mercado Libre of Argentina which reported earlier this week gained 1.2% overnight. MELI has the first mover advantage in E-commerce and e-payments in major Latin American markets.

*Japanese Fukui Computer Holdings, FKCIF, reported better earnings (details missing) and the share rose 1.3% over night in Tokyo, to ¥3125/sh after hitting 3170 at the start of Tokyo afternoon trading, a year's high. It yields 1.3%. I put in an order at yesterday's price which was the only one showing at my broker's. Wish me luck.

*Alibaba (BABA) has resumed its plan to list in Hong Kong. It now only has ADRs issued 5 years ago.

Energy

In the end the Brazilian offshore auction failed to get any major oil companies to bid because Petrobras would automatically get 30% of any concession. But the Bovespa index gained all the same.

*Azure Power Global Ltd (AZRE) of Mauritius, which builds solar plants in Indian, had its consensus estimate for the Sept. quarter cut by 1¢ to 3¢, a 25% drop.

*Eon SE (EONGY), a German ute, is up 0.72% overnight.

*I misspoke when I wrote that Pengrowth Energy of Calgary is bankrupt. Its loss was 21 loony cents per share in Q3. Its debt rose by $3 mn in Q3 while its adjusted funds flow dropped 31% from prior year to C$10.7 mn hit by C$8.9 mn for legal and advisory fees for loans and restructuring. Its board is trying to force its 2/3 of its common shareholders to accept a deal with Cona Resources Ltd. for the latter to repay its debt and buy all outstanding shares for 5 loony cents by Nov. 15 after which shareholders may get nothing. PGHEF today is trading at 3.6 to 4.1 US cents. It opened this year at 50¢ and I should have exited then, not now.

*Pembina Pipeline, also from up north, is now expected by the consensus to earn only 6.01 loony cents in the current quarter, vs an earlier level of 6.16 loony cents but there is a 10 cent margin between the high and low estimates still. PBA.

*Canadian uranium miner Cameco (CCJ) is up 1%. Bonus stock Earthstone Energy is up 2.4%.

*Bonus stock Ormat Tech of NV was down-rated to neutral by Cowan brokers last month and now it has been selected by Christopher Jones as a stock for trading if it continues to rise, as it has despite a very wide range of analyst opinions. It reported earnings of 30¢/sh Weds. The consensus forecast for the current quarter is 43-60 cents. Another on-line outfit says it is overpriced. ORA builds geothermal plants sold worldwide used also for storage of wind and solar energy. It ran into trouble in Hawaii with a volcanic eruption but we opted to keep it because this was a one-off. It is majority owned by Israelis, which is how I get into this. ORA's TP was upgraded by a dollar to $74 by JP Morgan overnight.

*Orocobre (OROCF) of Australia which mines for lithium in Argentina gained 6.1% today after it was tipped by Motley Fool Down Under and now is trading at $1.87 not far off its $1.54 yearly low.

*Bonus (US) share Noble Energy, NE, got upgraded by TD Securities with a $25 target price but was also downgraded by CFRA which cut its TP to $24 from $28.

Food & Drink

*Belgian Anhauser-Busch-Inbev (BUD, sold) had its Reuters EPS consensus forecast lowered some more for both this year and next. The new theory is that 2020 will be even worse than the current year from the beer giant because next-gen drinkers favor hard seltzer rather than more fattening suds.

*Greencore Group PLC reported to the Bank of Ireland (the CB) that Grand Cayman-based Coltrane Master Fund increased its stake in the ready-meals seller (mostly in England via supermarkets) to 4.57% from 3.07%. GNCGY's primary listing is in London and its ADRs are hard to track.

Disclosure: None.

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
Gary Anderson 2 years ago Contributor's comment

Good grief. Only NY would charge interest on zero dollars, lol. And then a penalty for paying the interest on zero balance late! There is aggravation for you but also it is absurdly funny.

Cynthia Decker 2 years ago Member's comment

Sorry you had to go through this. It's a great example of our pointless bureaucracy at its best.